The Union Finance Minister Shri Arun Jaitley in his Budget Speech 2015 had indicated that the rate of Corporate Tax will be reduced from 30% to 25% over the next four years along with corresponding phasing-out of exemptions and deductions. This is a step towards simplification of tax laws, which is expected to bring about transparency and clarity.

The Government proposes to implement this decision in the following manner:

• Profit linked, investment linked and area based deductions will be phased out for both corporate and non-corporate tax payers.
• The provisions having a sunset date will not be modified to advance the sunset date. Similarly the sunset dates provided in the Act will not be extended.
• In case of tax incentives with no terminal date, a sunset date of 31.3.2017 will be provided either for commencement of the activity or for claim of benefit depending upon the structure of the relevant provisions of the Act.
• There will be no weighted deduction with effect from 01. 04.2017.

The details of proposed phasing-out of deductions are available on the website of the Income Tax Department at www.incometaxindia.gov.in

Comments on this proposal may be sent within 15 days to Director (TPL-III) on mail at [email protected] or by post at Director (TPL III), Central Board of Direct Taxes, Room No. 147G, North Block, New Delhi- 110001.

Phasing out tax exemptions and deductions to lower corporate tax rate invites stakeholder comments on proposed implementation. The Government proposes reducing corporate tax while implementing a systematic phasing-out of exemptions and deductions, targeting profit linked, investment linked and area based deductions for corporate and non corporate taxpayers, discontinuing weighted deductions, preserving existing statutory sunset dates, and introducing a uniform sunset date for incentives lacking terminal dates; details are on the tax department website and stakeholders are invited to comment to the designated Director.